Lease your REA License?

Q.
Many a time, people ask me:

"When I get my REA License, can I rent it out to someone to run an agency firm?"

And, "How much I can get when I lease my REA license?"

A. (Repost from my-realproperty2.blogspot.com)

There are two sections of the law involved here. S.24 and S.30.

Section 24 of Valuers, Appraisers and Estate Agents Act, 1981 (Act 242) has a subsection (h) that prohibits this renting or leasing out of license.

Section 30 (1) of the same Act also has a subsection which deals with this act of renting or 'sublet'.

30 (1) (g) sells, transfers, sublets or otherwise permits any other person to use any authority to practise issued to him [the REA] under this Act;

Cancellation, suspension and admonishment

24. (1) Subject to the provisions of this Part, if a valuer, appraiser or estate agent or a probationary valuer or probationary estate agent whose name has been placed in the Register or the Register of Probationary Valuers/Probationary Estate Agents, as the case may be—

• (a) has been convicted of any offence involving fraud or dishonesty or moral turpitude; 
• (b) has been found to have obtained his registration or authority to practice under this Act by fraud or misrepresentation; 
• (c) has his qualification under section 18, 22A or 22D withdrawn or cancelled by the authority through which it was acquired or by which it was awarded; 
• (d) has contravened or failed to comply with any of the provisions of this Act or of any of the rules made thereunder; 
• (e) has not observed any conditions or restrictions subject to which he is registered; 
• (f) has refused or neglected to comply with any order of the Board acting under any of the provisions of this Act or of any of the rules made thereunder; 
• (g) has been found guilty by the Board of any professional misconduct or of any act or conduct which in the opinion of the Board is infamous or disgraceful; 

• (h) has allowed any unauthorized person to carry on valuation, appraisal or estate agency business in his name; or 

(Remaining parts of S.24 not shown here)


Therefore, allowing any unauthorized person (meaning one who is never been given the authority to practise) - to carry on estate agency business in his name (the REA's name) - is an offence under S.24.

And, such offence can be punished with the Board:

the Board may make an order—

• (i) cancelling his registration under the appropriate Part of the appropriate Register; 
• (ii) suspending his practice for a period not exceeding three years; 
• (iii) admonishing him and recording such admonishment in the appropriate Register; 
• (iv) admonishing him or imposing a fine not exceeding ten thousand ringgit or both and recording such admonishment or fine in the appropriate Register; 
• (v) imposing a fine not exceeding twenty-five thousand ringgit and recording such fine in the appropriate Register and that he be suspended from practice until the fine is paid; or 
• (vi) prohibiting him from applying to the Board for registration until all the conditions specified by the Board have been complied with. 

When a REA is removed or suspended from practising, he can no more carry out estate agency practice in the normal manner.

Thereafter, he has to appeal to the Board for leniency and reinstate him back to the register. This is spelled out in S.26 Reinstatement, and S.27 Appeal. While doing so, section 29 Procedure for appeal - need to be followed.

MORE SERIOUSLY, the Act also punishes the offenders (both the REA who lease and the person who pays for the license) under Section 30. Therefore, it is not just the REA who is at wrong, the partner in crime is also wrong. This is stated in S.30 (1) (j).

Why?

• S.30 is about "Any person who,...". That means whoever without limiting to REA alone.

• The punishment under S.30 is RM300,000 or maximum 3 years imprisonment or both.

Extract of S.30 (1) relevant to this offence is as below.

30. Offences

(1) Any person who-

(a) - (f) are left out intentionally, so please refer to Act.

(g) sells, transfers, sublets or otherwise permits any other person to use any authority to practise issued to him [the REA] under this Act;

(i) acts in contravention of section 21 [Restriction on Valuation] or 22C [Restriction on Estate Agency Practice]

(j) aids and abets in the commission of an offence under this Act,


As for 'how much is to lease the license?'

I don't know. I guess it is kind of how desperate you (or the parties who want to lease) are? Generally, it is demand and supply and market forces like economic performance of the real estate industry as a whole.

Just a word of caution, leasing and being sluggish partner is different. When a REA is operating an agency he can choose to only work certain hours to sign papers and manage the office. He can be a sluggish business partner, and it is perfectly legal. He can even own 51% of the shares of a partnership or body corporate (agency firm) and the remaining 49% being owned by someone who is not a REA. Nevertheless, it must be prior approved by LPPEH under S.23 (2)(b)(iv)(C).

However, he cannot allow his name and signature to be used by others who is not a REA in running this agency. This is enshrined in Rule 102 - Signature on report, etc. and 103 - Use of registered estate agent's name - of Valuers, Appraisers and Estate Agents Rules, 1986.

On the other hand, when he receives a fee for using his name, and allowing his operation to be entirely managed by a third party who is not a qualified REA, he is in contravention of S.24 (h).

Ref:
Sections 24 (h) and 30 (1) (f) (i) & (j) of VAEA Act, 1981.